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PNG’s upstream talks

create uncertainty

Upstream developers are finding it increasingly difficult to make it
past the negotiating table to sign final deals with the government

COMMENTARY THE Papua New Guinea (PNG) government has Port Moresby succeeded in renegotiating the
made it clear over the last coupled of years that it terms for the 5.4mn tonne per year (tpy) Papua
wants upstream developers to offer the state the LNG project, which is operated by TotalEner-
WHAT: best possible terms. gies. Papua LNG had been set to be developed in
ExxonMobil is back The perception that PNG has not benefit- tandem with an expansion of PNG LNG, under-
negotiating over P’nyang, ted sufficiently from its oil and gas industry pinned by P’nyang, in a combined $13bn scheme
while a deadline for helped to bring about a change of govern- to raise the country’s liquefaction capacity. How-
Twinza’s Pasca A deal has ment in 2019, and Prime Minister James ever, Marape said in early 2020 that ExxonMobil
been missed. Marape’s administration has pushed for had been unwilling to make any “significant” fis-
more favourable terms. cal concessions beyond the terms of its opening
WHY: This has, however, led to breakdowns in offer for developing P’nyang.
The government has negotiations with ExxonMobil on the P’nyang Now that some time has passed – and the
adopted an aggressive natural gas development and with Twinza Oil LNG market is booming, with expectations that
approach over upstream on the Pasca A gas project. demand for the super-chilled fuel will grow fur-
negotiations. While ExxonMobil is back at the negotiating ther still – the parties are willing to try again.
table with Port Moresby, Twinza revealed this “A series of workshops regarding the develop-
WHAT NEXT: week that its “best efforts” were not enough to ment of the P’nyang gas fields will take place over
PNG may have the upper get government negotiators to sit down with it to the next couple of weeks and if all goes well, we
hand now because of sign previously agreed upon final terms by Port can expect to sign a P’nyang heads of agreement
higher LNG prices, but its Moresby’s own deadline of August 17. [HoA] around the end of this next month and
image as an investment This uncertainty could have long-term ram- a gas agreement thereafter,” PNG Minister for
destination has taken a ifications for the country’ investment prospects. Petroleum Kerenga Kua said last week.
beating. ExxonMobil told Reuters this week that its
Return to P’nyang discussions with the PNG government would
Talks on ExxonMobil’s P’nyang the project, be aimed at aligning “on a gas agreement that
which is located in the Highlands region and will ensures fair benefits for project stakeholders
supply the super-major’s PNG LNG export ter- and the people of PNG”. Further details were
minal, stalled in late 2019 after the government not specified.
pushed for better terms than it had obtained for The P’nyang Area consists of two fields –
the original PNG LNG development. P’nyang and P’nyang South – which are located

P8 www. NEWSBASE .com Week 34 26•August•2021